Sara Lussman shows how Sonifi Solution's StayConnect app works at SpringHill Suites by Marriott. Hotel guests can use their cellphone to change channels and rent movies on the hotel's TV. / Emily Spartz / Argus Leader

Patients at Texas Health Harris Methodist Hospital can use technology by Sonifi Health Solutions for tasks such as checking on their doctor's schedule and ordering meals. / Submitted image

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A new name, executive team and growth strategy represent months of rapid change for the Sioux Falls-based business formerly known as LodgeNet Interactive Corp.

The company, which entered Chapter 11 bankruptcy earlier this year, has reorganized under the name Sonifi Solutions. CEO Michael Ribero, who took over in late March, said rebranding will position the company to capture more opportunities in other markets.

It also should help the company to overcome perception problems, he said.

“Beyond the fact that we needed a name that gave us breadth, we also were very concerned that the LodgeNet brand had been tarnished to the point where it could take the wind out of a conversation when it came up,” Ribero said.

Sonifi employs 404 people in Sioux Falls, which is about 100 fewer than at this time last year. The business was founded as Satellite Movie Co. in 1980, renamed LodgeNet Entertainment Corp. in 1991 and became a publicly traded company in 1993.

LodgeNet struggled for profitability and was delisted from the Nasdaq stock market earlier this year. It is not actively trading, and Ribero said for now it looks more like a private company.

“We realize the company needs a fair amount of remediation to be in a position to re-list,” he said. “But we know we have the raw materials to make it happen.”

Guest experience grows

Sonifi’s core business is providing content and connectivity services to the hospitality industry. Most of its revenue comes from hotels, which carry the company’s products in 1.4 million rooms.

As its earnings struggled, the business found a believer last year in California-based private equity firm Colony Capital LLC, which invested $60 million through a syndicate to become the controlling shareholder.

At the time, Colony executives called it a natural fit. Colony’s investment portfolio ranks it among the world’s largest private equity real estate funds, with investments in hotels worldwide and a stake in Miramax Films.

With Colony’s investment, Sonifi is positioned to grow.

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“Despite the fact that the company has experienced really significant challenges over the last six or seven years, it’s still the market leader,” Ribero said. “Its closest competitor is probably 10 or 15 percent of its size on a full-service basis, and as a platform to build on, I don’t think you can get much better.”

Hotels provide a captive audience for programming, Ribero said, adding the average guest has the hotel television on four hours a day. Sonifi’s system tracks what guests are watching and provides data about viewing habits, “so we can offer a more personalized and customized experience,” Ribero said.

The new executive team has spent the past few months reviewing Sonifi’s technology. The company launched a product called Envision last year but market reaction was “tepid at best,” Ribero said. The product, now called Stay1000, has been reworked to add what he calls better core functionality for customers.

“You’re going to see us very quickly catch up to the experience you as a consumer can get in your home,” he said. “Our goal over the next 18 to 24 months is to once again eclipse what you can get at home to make the hotel viewing experience market-leading and unique.”

Sonifi also is focusing on delivering its content on tablet and mobile devices, so guests can access it anywhere on the hotel property, “even in the pool or common areas, on their schedules and not necessarily ours,” Ribero said. “That’s what we’re looking to build.”

Sonifi earlier this year announced a new relationship with DirecTV, which will bring DirecTV programming, marketing and technical capabilities to Sonifi’s clients. Hotels and hospitals also will be able to buy additional programming such as DirecTV’s NFL Sunday Ticket.

“It’s very significant,” said Tom Storey, president of hospitality. “Their scale and technical capabilities combined with ours really is unsurpassed in the hospitality industry.”

Storey, who started three months ago, said the former LodgeNet was an icon in the hospitality industry that will benefit from repositioning itself.

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The new Sonifi promotes how it can help hotels build their own brands, he said, “moving from a business-to-consumer company, where LodgeNet was trying to build a brand through the hotel companies; some would say on the backs of the hotel companies.”

Sonifi should represent a communications platform for each brand and support the customer with content and connectivity, Ribero said.

“We superimposed ourselves on all the major brands by forcing that LodgeNet brand and ownership of the television, which not only created conflict but really devalued the value proposition we offer hotels,” he said.

Branding is critical to hotels trying to build guest loyalty, said Scott Hansen, director of guest technology for Marriott International. Hansen is one of several industry executives who gave input to Sonifi on needed changes.

He said allowing hotels to have more ownership of the information delivered through the television is critical to a successful new business model.

“We, as a company, are not fully prepared to put a stake in the ground and say they will be Marriott’s provider going forward, just because there are a lot of questions,” Hansen said. “But we’re encouraged they were able to emerge from bankruptcy, get this investment from Colony Capital and pair with DirecTV to formulate competitive pricing plans. But the product itself, we need to see more of it because what we have today doesn’t meet our needs.”

The Sioux Falls SpringHill Suites by Marriott is testing new Sonifi technology. General manager Sara Lussman said she likes what she sees so far.

“One of the things I really do like about their system is their new StayConnect app where guests can just change the channel with their phone,” she said. “We need to be more in tune to identifying ourselves in the mobile device world, and I think it’s great they’re putting it out there.”

Health care offers opportunity

Nearly a decade ago, LodgeNet leadership recognized the company had built a content platform in hotels that could translate into hospitals.

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LodgeNet Healthcare is a wholly owned subsidiary now known as Sonifi Health Solutions. It has more than 80 contracted facilities nationwide and provides services to nearly 20,000 patient rooms, including at both Sioux Falls health systems.

“When you’re laid up in a hospital, the primary source of entertainment, information and socialization is the television,” Ribero said.

Federal health reform has put an increased emphasis on the patient experience, a shift that Sonifi executives say supports their business development. Hospitals are evaluated in part based on surveys that cover everything from patients’ comfort during the stay to their understanding of their medical situation. Hospitals that don’t score well can lose a portion of their federal reimbursement.

“So patient engagement … is something that is greatly important to all hospitals today because they will be penalized or rewarded based on those areas,” said Gary Kolbeck, president of Sonifi Health Solutions.

Along with in-hospital entertainment, Sonifi’s systems allow patients to view their medical records, control the temperature of the room and watch videos about procedures and follow-up care.

Other features include biographies of the patient’s care team members and a schedule for the day that includes when a physician will visit or when therapy will occur.

“We’ve had great results from patients indicating they are more likely to ask questions of the care team if they know who they are,” Kolbeck said.

Texas Health Harris Methodist Hospital Alliance is one of Sonifi’s clients. President Winjie Tang Miao said the Sonifi system is popular with patients who use it to order room service, watch educational videos, TV and movies on demand, and adjust the temperature.

“I think health care has really become a service industry, and if you don’t have great quality, you’re not even in the game,” she said. “And then once you’re in the game, how do you distinguish yourself from your competitors? One way you do that is through the patient experience.”

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Miao’s hospital will pilot a Sonifi product this fall designed to bring content from the TV into the patient’s hands through a tablet device.

“We wanted to meet the patients where they are,” she said. “If you’re a grandma and you’re 85, ordering your meal from a TV at the end of the bed could be problematic.”

The Sonifi product is successful in part because it gives patients a sense of control over their care, Miao said.

“When we talk to patients, what’s most important is communication about their care, coordination of their care … and treating the whole person,” she said. “The Sonifi technology really does all these things.”

Sonifi also is working on more in-home content with information and education for patients after they are discharged, Kolbeck said, as well as interactive games to teach about asthma and diabetes that draw on the company’s media background.

“Obviously, we’ve gone through some ups and downs and challenges … but I think it’s all on a positive note,” he said. “It’s restructuring, refinancing the company … and having new investments so we can focus on the growth of the business, which we haven’t had over the last few years.”

Sonifi strategy

The name Sonifi is meant to invoke speed, technology and flexibility, Ribero said.

“We have such an opportunity to shape guest perception, and deliver an experience and enable them to use us a launching pad to access whatever type of content they might want,” Ribero said.

The Sonifi platforms can be used to launch more business for the company as well, he said.

“We start thinking about other venues like colleges and universities, airlines, cruises, rail,” he said. “It’s amazing how technology today can hit a moving target with absolutely no issue, so that opens up a litany of opportunities: managed care facilities, health care-oriented venues, like dialysis.”

The company plans to keep developing and debuting products, Ribero said, likening it to how Apple refreshes its product line.

“You’ll see us get more aggressive on the marketing and sales front, and you’ll see a steady stream of product improvement on the existing product,” he said.

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Although Ribero and primary investor Colony Capital both are based in California, Sioux Falls is still considered the headquarters at this point.

“I think Sioux Falls will continue to be a critical part of what we do,” he said, while adding that some functions likely will move to the coasts to be closer to customers.

“One of the challenges with Sioux Falls, even though we think we can do the core operation more effectively than on either coast, is the fact that our employees only see a small fraction of the hotel product available in the marketplace today.”

Hospitality president Storey said that he, Ribero and others can bring their broader perspective to the Sioux Falls workforce, although he added there’s a benefit to having bases of operation in multiple parts of the market.

“My experience has been that most of the colleagues here in Sioux Falls get it,” he said. “They have a feel for the industry. What they really want from us is the ability to tap into the contacts that we have and our ability to be a conduit of information.”

The goal, Ribero said, is to get back to how LodgeNet did business 15 years ago, as the company that brought a level of viewing and video-on-demand that at the time was cutting-edge technology.

Early industry reaction to the new Sonifi name, product and business plan has been outstanding, he said.

“I think we made a statement that this isn’t your father’s Oldsmobile. We have big plans for the market and our future, and our customers responded,” Ribero said. “The feedback … was better than we could have ever anticipated. Now, it’s about buckling down and making it happen, and our team in Sioux Falls is the team that’s going to make it happen.”